The utility connects between 3,000 and 5,000 solar roofs per
month, but many of its 15 million customers don’t own their homes or have
access to a suitable rooftop for solar generation. By the company’s own
admission, the existing program to serve those residents with community solar
didn’t work well enough.

Drawing on lessons from California and elsewhere, SCE
proposed a suite of clean retail offerings in late September, including 100
percent clean energy and a new community renewables option. The former would
drive additional utility-scale renewables development; the latter would enlist
the utility as a customer aggregator on behalf of community solar projects.

“Community solar is going to be built by a third-party
developer, but, currently, it's challenging for that developer to amass all of
these different little subscribers,” said Jill Anderson, vice president for
customer programs and services, in an interview at Solar Power International.
“What we're doing is helping connect customer demand to the market.”

The utility has asked the California Public Utilities Commission for
permission to recover up to $5.87 million in administrative costs for the new
“Green Energy Programs,” to be launched in 2021.

If successful, the program would create new opportunities
for community solar in the largest state solar market, which has nonetheless
struggled to deliver steady work at the community scale. It also would burnish
clean power options from one of the state’s three investor-owned utilities at a
time when Community Choice Aggregators are wooing
customers with promises of cheaper, cleaner power.

Slow start

California's community solar market hasn’t lived up to the
state's frontrunner status.

“For a market that is leading the country in utility-scale,
commercial and residential solar, California’s community solar market is
abysmal,” said Austin Perea, a senior analyst covering distributed solar at
Wood Mackenzie Power and Renewables.

California has deployed a cumulative 112 megawatts of
community solar, which isn't nothing, but the projects have tended to be
one-offs rather than a steady, predictable deal flow, Perea said. Those
deployments pale in comparison to California's 5 gigawatts of residential
capacity.

Measured another way, California's overall solar market
accounts for roughly 40 percent of U.S. solar capacity. Its community solar
only accounts for 10 percent of U.S. community solar.

Structural problems have held back progress. Community solar
developers anywhere must corral a large number of customers to subscribe before
a project can get off the ground. California’s pricing policies made that
harder than usual.

“The CPUC didn’t approve fair pricing structures for the
IOUs’ community solar programs,” said Susannah Churchill, California director
at advocacy group Vote Solar, in an email. “Customers therefore have to pay a
premium to sign up for community solar, severely limiting demand.”

The adoption numbers for SCE’s existing Green Tariff Shared
Renewables program attest to that lack of enthusiasm.

Fewer than 1,000 customers are currently enrolled in Green
Tariff, which procures 100 percent clean electricity, SCE said in the filing. The program contains an Enhanced
Community Renewables component, designed to give customers access to
community-based clean energy projects, but no customers have enrolled in that
program.

“Numerous barriers for customers and developers, including
program caps and sizing restrictions, make it difficult for SCE to subscribe
customers to either GTSR program,” the company noted.

GTSR imposes a 2-megawatt cap on non-governmental accounts,
for instance, which blocks large commercial customers from participating. A
1-megawatt cap on environmental justice projects has prevented developers from
achieving economies of scale for those projects.

SCE's new deal

SCE envisions its new Green Energy Program delivering 181
megawatts of generation.

In response to the earlier issues, SCE wants to lift the cap
for its New Green Tariff from 2 megawatts to 5 megawatts.

The community renewables program will be largely revamped.

In the new design, a municipal or large commercial customer with
at least 500 kilowatts of load sponsors a community solar project. The sponsor
consumes at least 80 percent of the generation, and up to 20 percent will be
available to community residents for subscription. The contracts will last for
10, 15 or 20 years.

If regulators approve, procurement and construction
schedules would push deliver of energy from new community projects into 2022 or
2023, the utility said.

Rather than leaving it up to developers to make community
projects happen, SCE wants to lend a hand.

Utility encroachment into residential clean energy tends
to set
off alarm bells for solar industry advocates, but this is different
than a utility-owned residential pilot.

For one thing, all the solar installation would be bid out
to the industry; SCE isn’t getting into the solar development game, just
helping developers assemble their subscriber list. Furthermore, the customer
base here is precisely those residents who cannot get rooftop solar for
themselves.

Just how effective the utility will be at identifying customers
remains to be seen. Plenty of power providers have struggled
to convert retail customer relationships into solar leads. It's also
hard to tell what effect the 80 percent sponsor requirement will have on
project development; it could be a high bar to reach, or it could nourish the
financial health of the projects.

The big picture

This small programmatic change interacts with macro-level
transformations underway in California’s grid.

Gov. Jerry Brown signed
a law in September banning carbon emissions from electrical generation
by 2045; that means that the overall energy mix is headed in the direction of
the green tariff.

“As we all are starting to see that we need to go even
further if we're going to fully decarbonize the grid, finding as many creative
ways to integrate renewable energy and respond to customer demand at the same
time is moving us forward,” Anderson said.

Rooftop solar capacity does not count toward California’s
renewables targets, though it does reduce net demand for power. The larger
scale projects built for the green tariff program, though, will count toward
the targets, while making customers feel good about their clean choices.

Meanwhile, the major utilities are grappling with customer
defection to Community Choice Aggregators, whereby cities and counties source
their own power and deliver it through utility wires. CCAs promise cheaper,
cleaner power options, in part because they don't have to pay off legacy power
contracts from the days before wind and solar got so cheap.

SCE’s new program would also offer cleaner power options
than the current energy mix, without the risk of relying on a brand-new
purchasing entity with little or no credit history. This could serve to assuage
SCE customers who would otherwise look elsewhere for local, zero-carbon
alternatives.

Is the price right?

Ultimately, the success of the green energy program will
come down to cost.

Some customers are willing to pay more for the knowledge
that their electricity comes from clean sources. But when solar companies pitch
a rooftop system, they try to demonstrate how much money it will save compared
to the utility rate.

SCE has little incentive to undercut its own prices. Its
filing touts “low or no premiums” for the 100 percent clean offerings, which is
different from paying less.

It does, however, expect the new community solar to be
cheaper than the existing program. That's partly because renewable power
purchase agreements keep getting cheaper.

"The new programs also propose a structure that is common
to other tariffs where the program administration costs are shared by all
customers and not just those participating," Anderson added.

Customers who qualify as living in disadvantaged communities
will receive additional discounts, "so opting for green supply or
community solar might even lower their energy bills,” she said.

“What you ideally want is a discount to your bill in order
for a community solar market to really take off,” solar analyst Perea said.

If regulators approve the proposal, customers will get to
weigh the costs and benefits for themselves, four or five years down the road.